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WTO calls for enhancement of LDC integration in global services trade

Covid-19 has affected the service especially transport sector in LDCs

Covid-19 has affected the service especially transport sector in LDCs

In light of the COVID-19 crisis, which has seen the least developed countries (LDCs) suffer the steepest declines in services trade, the World Trade Organisation (WTO) has called for the restoration and increment of the export performance of LDCs in services trade. 

Speaking at a webinar on LDCs and services organized by the WTO’s council for trade in services recently, WTO director general Dr Ngozi Okonjo-Iweala, highlighted the impact of COVID-19 on LDCs' services trade, saying the pandemic has severely affected services that require in-person contact between suppliers and consumers, most notably the tourism and transport sectors, where LDCs have a relatively high footprint in global trade.

According to the United Nations, LDCs like Uganda, are countries that exhibit the lowest socioeconomic development, with the lowest Human Development Index (HDI) ratings of all countries in the world.

Statistics from WTO, an intergovernmental organisation that regulates and facilitates international trade between nations, shows that in 2020, LDC exports of tourism and transport services fell by 69% and 16%, respectively, with total services export revenue loss of nearly $17 billion.

“Decreased export revenues mean job losses and economic distress for people, along with increased financial and debt pressures for governments,” Dr Ngozi said.

“Against this background, restoring and increasing the export performance of LDCs in services takes on even greater urgency.”

“Services can help LDCs increase and diversify exports from more traditional agricultural products and commodities, reducing exposure to price volatility,” Dr Ngozi added.

Information from the WTO indicates that in 2019, prior to the pandemic, LDCs accounted for 0.3% of total global services exports across all four modes of supply. In comparison, their share in global tourism exports was 1.3%, and 0.6% for transport services, mostly air passenger transport.

With the goal of enhancing LDCs' participation in global services trade, WTO members in 2011 adopted the LDC services waiver to allow members offer preferential market access for services and service suppliers from LDCs, analogous to existing trade preferences for LDC merchandise exports.

“To date, 51 WTO members accounting for over four-fifths of global economic output and trade have notified preferences for the benefit of LDC services and services suppliers. However, we should not rest on our laurels,” Okonjo-Iweala declared.

“Our ultimate objective is to enhance LDCs' integration in global services trade. We need to ensure that we are doing enough, that our actions continue to facilitate progress. And we need to ask ourselves if there are other things that we can do that would help us reach our objective.” she said.

Speaking at the webinar, the commissioner external trade in the ministry of Trade, Industry and Cooperatives in Uganda, Emmanuel Mutahanga, highlighted the economic impact of COVID-19, which he said, had made LDCs particularly vulnerable.

“This workshop comes at a critical time for us to focus attention in the waning days of the pandemic that wreaked
havoc on our peoples in the world,” he declared.

Last Sunday, June 6, Uganda President Yoweri Museveni, slapped a new lockdown that will see schools and churches closed for 42 days and cross-district travel except between Kampala, Wakiso, and Mukono banned for 42 days among other measures.

The new measures to curb the spread of the virus instituted by the Ugandan government comes at a time when the country grapples with a second COVID-19 life-threatening wave where an average of 1000 cases are recorded per day in the recent weeks.

Chad's minister of Trade and Industry, Ali Djadda Kampard, also noted that LDCs have been disproportionately affected by the COVID-19 crisis due to their heavy reliance on travel and transport services.

A decline in LDCs' overall services exports ranging between 11% and 55% was reported in the first three quarters of 2020. For non-LDC countries, the downturn ranged between 7% and 28%.

The minister called for a holistic approach to identify the challenges and barriers that LDC service providers face, adding that the context for the LDC services waiver had changed.

The June 2-3 webinar sought to review and promote the operationalization of the LDC services waiver. It was organized to provide a platform for dialogue and experience sharing among LDC stakeholders and members, and assist them in further promoting preference implementation, notification, and the exchange of information about members; measures to increase LDC participation in global services trade.

Sessions during the webinar examined new data on LDC services exports, efforts to improve data collection and dissemination, first-hand information from exporters and importers of LDC services, and technical assistance and capacity-building efforts.

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